End of share sales tax waiver

T he end of the waiver for the financial transaction tax on stock sales is scheduled to take effect in 2023, increasing the country’s revenue as part of a tax system overhaul.

The tax is estimated to result in higher costs for stock investors of 0.22%, according to the Revenue Department.

The end of the waiver should not affect stock trading, instead ensuring fairness in the tax system, according to Finance Minister Arkhom Termpittayapaisith.

The cabinet on Nov 29 approved a financial transaction tax on securities trades on the Stock Exchange of

Thailand (SET), ending a three-decade waiver.

Once in effect, there would be a 90-day grace period for adjustments. The tax is charged on securities trades from the first baht of proceeds available from stock sales.

This tax has been on the books for more than 30 years, but the government has consistently waived it to support market development.

Collection falls under Revenue Department regulations, which require the payment of a 0.1% specific business tax on securities trades and a related local tax of 10% of the specific business tax, bringing the total financial transaction tax to 0.11% per share sold.

In the first year, the department is requiring the payment of a 0.05% specific business tax on securities trades and a related local tax of 10% of the specific business tax, bringing the total financial transaction tax to 0.055% per share sold, according to Mr Arkhom.

From Jan 1, 2024, the department will require the full payment of a 0.1% specific business tax on securities trades and a local tax of 10% of the specific business tax, for a total of 0.11% per share sold, he said.

A levy of 0.11% should generate 15-16 billion baht in revenue per year for the state’s coffers, Mr Arkhom said.

He said the government needs to seek more revenue for the future. The government set a target to increase its revenue per GDP ratio to 16% in five years from the current 14.9%. One means to achieve this goal is by expanding the tax revenue base.

Revenue Department directorgeneral Lavaron Sangsnit said the tax would result in higher overall costs to stock investors of 0.22%, still lower than levies in some other regional stock markets. For the first year of enforcement, the rate is 0.055%, which will raise investors’ transaction costs to a total of 0.195%, he said.